Today, in its Existing Home Sales report for June 2007, the National Association of REALTORS noted that mortgage rates are lower by 0.02% than in June 2006.
I guess I knew that, but wasn’t paying attention to it. I had wrongly assumed rates were higher because this recent run-up was so long and extreme.
B. Fear harder:
A lot of media, including BusinessWeek, reported that large numbers of mortgages would reset at higher rates, potentially forcing huge numbers of borrowers into default. A popular number widely reported was that $1.5 trillion worth of loans was due to reset in 2006 and 2007, according to the researchers at Economy.com. That’s about a quarter of all mortgages outstanding. Mozilo says that in reality more than two-thirds of the borrowers with adjustable mortgages refinanced their loans before their payments spiked. For example, the company notes that only 26% of prime mortgages that were due to reset to higher rates in 2007 are still active. Among subprime loans, 36% are still active. That suggests that most people have, in the words of analyst Samuel Crawford, “refinanced…out of the way of danger.”
Of course it’s easy to blame the media and analysts like Economy.com for suggesting there may be problems with adjustable mortgages. The reality is that even if many folks with toxic loans did refinance, there are still millions of other borrowers getting squeezed right now.
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Vernon says:
Those numbers seemed tweaked down quite a lot.
I was curious if those numbers reflected the opportunity territories?
July 25, 2007 — 8:11 pm